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Chrysler’s retail focus (and incentives)

by David Zatz on

Fiat Chrysler LLC has sometimes gone back on their promise to rely more on retail sales than fleet sales — especially rental fleets. October presented a fine opportunity for management to backslide and sign some short-sighted huge fleet deals, to cover up a drop in retail sales — but they didn’t. 85% of FCA US sales in October 2017 went to retail buyers — far above the company’s average, and well above October 2016 (77%).

FCA US was heading in a favorable direction from 2011 through 2014, but then backslid in 2015 and 2016, presumably as the retail market started to weaken, and to make up for lost production (the minivan and LX changeovers, and dropping the Dart and 200).

Aiding FCA in their discipline is the dropping of the old Compass and Patriot with replacements that can sell without high rebates or breakeven/money-losing fleet sales; a new minivan that commands higher prices, even if sales aren’t quite as good as the heavily incentivized Town & Country; and not having to push the Dart and 200 in a nation that suddenly threw its weight into crossovers.

According to Bill Cawthon, writing in, FCA could probably have swung better sales if they’d increased incentives more; GM went up to a stunning $5,105 per car, the most of any automaker, and still managed to have sales drop by 2.2%. FCA US was the fourth most generous in incentives, with $4,631 per car in incentives — 11% more than in October 2016. FCA’s incentives went up by around $446 per car, while transaction prices rose by around $800.  Ford only boosted incentives by 9%, and ended up with sales gain. (Figures from ALG/True Car).

When incentives are measured as a percentage of the sales price, FCA US is still #4 — but this time, Kia has the biggest spiffs, followed by Nissan, and then GM. Ford is still #5. Which automaker has to give away the least? Regardless of how you measure it, it’s Subaru — coming in at around half of the next best automaker’s number.

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